What does foreclosure mean?

Foreclosure refers to the legal process through which a lender takes possession of a property when the borrower fails to meet the terms of the mortgage agreement. This typically occurs when the borrower defaults on their loan payments, prompting the lender to initiate proceedings to recover the owed amount by seizing the property.

In this process, once the lender has legally taken over the property, it may be sold to recover the outstanding debt. This distinction is crucial, as foreclosure is fundamentally about the lender's right to reclaim a property and not merely about selling it or transferring ownership.

Understanding foreclosure is vital for those involved in real estate and property management, as it highlights the consequences of mortgage default and the rights of lenders in such scenarios.